Court upholds $311K award against debt collector

BILLINGS, Mont. 
A North Dakota law firm accused of trying to collect a $3,800 debt after the statute of limitations expired is now the one that owes a lot of money.

An appellate court has upheld a $311,000 jury award to a Montana man who sued the firm in 2007 over a violation of the federal Fair Debt Collection Practices Act.

Johnson, Rodenburg & Lauinger appealed the April 2009 summary judgment and damages awarded to Timothy McCollough of Laurel. The case was heard in July by a special panel of the 9th U.S. Circuit Court of Appeals in Billings, including retired Supreme Court Justice Sandra Day O'Connor.

The panel issued a decision Friday upholding the damages. They include $1,000 statutory maximum for violating the debt collection law, $60,000 in punitive damages and $250,000 for emotional distress.

"I'm just so giddy it's all over. We're finally able to take a deep breath," McCullough told The Billings Gazette on Friday. "We knew we had a good case, but it just went on forever."

McCullough said he hoped the case showed debt collectors that "people are going to know they don't have to take the garbage. They can fight back."

A call from The Associated Press seeking comment from Johnson, Rodenburg & Lauinger on Tuesday was not immediately returned.

McCullough had old credit card debts from the 1990s and worked with companies to repay what he owed, despite a head injury that left him disabled and on Social Security, which is exempt from collections. In 2000, Chase Manhattan charged off about $3,000 in debt, The Gazette reported.

The credit card debt was sold to CACV of Colorado, which sued McCullough in Yellowstone County for $3,816 in 2005. McCullough, who represented himself, argued that the statute of limitations had expired and that he had no money. The case was dismissed.

In 2006, CACV retained JRL, a law firm that specialized in debt collection, to pursue the collection of outstanding debts it had purchased. Under its contract with CACV, JRL was "responsible to determine (its) legal and ethical ability to collect these accounts."

CACV sent information on McCollough's debt to JRL, whose screening procedures noted the statute of limitations expired Aug. 21, 2005. However, CACV also incorrectly told JRL that McCollough had made a payment in 2004, thus extending the statute of limitations.

Despite the conflicting information, JRL filed a collection complaint against McCollough in April 2007 seeking $3,816 for the debt, interest of $5,537 and $600 for attorney's fees and court costs.

In June 2007, McCollough responded that the statute of limitations had expired and this was the third time he'd been brought to court on the account. The next month, JRL sought further information from CACV and was told they didn't have any more due to the age of the account. In August, CACV told the firm that an earlier notation the statute of limitations had been extended was incorrect.

In December, CACV instructed JRL to dismiss the lawsuit because the statute of limitations had expired. JRL moved to dismiss.